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Reliance Steel & Aluminum Reports 2011 Financial Results
02/20/2012 - Reliance Steel & Aluminum Co. reported net income of $67.9 million on Sales of $2.03 billion for the fourth quarter, and net income of $343.8 million on sales of $8.13 billion for the year ended December 31, 2011.
Reliance Steel & Aluminum Co. reported net income of $67.9 million on Sales of $2.03 billion for the fourth quarter, and net income of $343.8 million on sales of $8.13 billion for the year ended December 31, 2011.
Fourth Quarter Results — Fourth quarter net income of $67.9 million represents a 72% increase vs. the year-ago quarter net income of $39.5 million, and a 20% decrease from net income of $84.9 million in the previous quarter (3Q-2011). Earnings per diluted share were $.91, up 72% from earnings per diluted share of $.53 for the year-ago fourth quarter, and down 19% from earnings per share of $1.13 in the previous quarter (3Q-2011).
Sales were $2.03 billion, up 28% from sales of $1.58 billion in the year-ago fourth quarter, and down 5% from sales of $2.14 billion in the previous quarter (3Q-2011). Results include in cost of sales a pre-tax LIFO charge, or expense, of $17.8 million, compared with a pre-tax LIFO charge of $10.0 million for the year-ago fourth quarter and $22.5 million for the previous quarter (3Q-2011).
Full Year Results — Full-year net income of $343.8 million represents a 77% increase compared with net income of $194.4 million for 2010. Earnings per diluted share were $4.58, which represents a 75% increase compared with earnings of $2.61 per diluted share for 2010. Sales were $8.13 billion, up 29% compared with sales of $6.31 billion for 2010. Results include in cost of sales a pre-tax LIFO charge, or expense, of $85.3 million compared with a pre-tax LIFO charge of $34.8 million for 2010. The LIFO adjustments, in effect, reflect cost of sales at current replacement costs.
Reliance’s tons sold in 2011 were up 13% from 2010 and the average price per ton sold in 2011 was up 15% compared to 2010. For 2011, carbon steel sales were 53% of net sales; aluminum sales were 15%; stainless steel sales were 15%; alloy sales were 10%; toll processing sales were 2%; and other sales were 5%.
Management Comments — “The 2011 fourth quarter started out slower than we expected, with tons sold in October up only slightly over September on a per-day basis,” said David H. Hannah, Chairman and CEO of Reliance. “However, November and December tons sold were stronger than we had anticipated resulting, overall, in a solid fourth quarter demand environment. Our full year 2011 results improved nicely from 2010. Demand continued to improve slowly and steadily in many markets where we sell our products. Those industries where we experienced more significant improvements over 2010 were energy (oil & gas), agriculture and mining. Aerospace, semiconductor and electronics, and our toll processing businesses, primarily related to the auto industry, were also solid. Even non-residential construction improved slightly over 2010, but significantly lagged compared to the improvements in our other markets.”
“Our balance sheet provides a strong foundation for our operations and our growth strategies, with a net debt-to-capital ratio of only 28.4% at December 31, 2011,” continued Hannah. “We had $645 million outstanding on our new $1.5 billion credit facility at December 31, 2011, providing ample room for continued organic growth as well as additional acquisitions.”
Outlook — “Currently, the prices of most of the metals we sell are increasing over the fourth quarter levels, and we expect pricing, overall, to remain relatively strong through the 2012 first quarter,” said Hannah. “Additionally, we anticipate demand to continue to improve slowly but steadily, except for the energy (oil & gas), aerospace, heavy equipment (farm and mining), and auto industries where we look for higher than average growth. Given these expectations, 2012 earnings should be higher than 2011 and, at this time, we estimate earnings per diluted share in a range of $1.15 to $1.25 for the 2012 first quarter,” concluded Hannah.
Recent Highlights — Effective August 1, 2011, Reliance acquired Continental Alloys & Services, Inc., headquartered in Houston, Texas, and its affiliates that, combined, comprise a leading global materials management company focused on high-end steel and alloy pipe, tube and bar products and precision manufacturing of various tools designed for well completion programs of global energy service companies with 12 locations in seven countries. Continental had sales of $205 million for the five months ended December 31, 2011.
Also, effective February 1, 2012, Reliance acquired McKey Perforating Co., Inc., headquartered in New Berlin, Wisconsin, and its subsidiary McKey Perforated Products Co., Inc., located in Manchester, Tenn., through its wholly-owned subsidiary Diamond Manufacturing Company. McKey was founded in 1867 and is a contract manufacturer that provides a full range of metal perforating and fabrication services to customers located primarily in the U.S. For the year 2011, McKey’s net sales were approximately $18 million.
Headquartered in Los Angeles, Calif., Reliance Steel & Aluminum is one of the largest metals service center companies in North America. Through a network of more than 220 locations in 38 states and Belgium, Canada, China, Malaysia, Mexico, Singapore, South Korea, the U.A.E. and the United Kingdom, the Company provides value-added metals processing services and distributes a full line of over 100,000 metal products to more than 125,000 customers in a broad range of industries.
